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The ‘Preferred’ Path to Higher Returns

With zero or negative interest rates, here’s an alternative to bonds.

By

Burton G. Malkiel

Updated June 20, 2016 9:44 a.m. ET

Now that central banks have pushed short-term interest rates to zero or even to negative readings, all asset prices have risen to unusually high levels and prospective future returns appear to be unattractively low. In a world in which bonds no longer provide safe and steady returns, what is the investor seeking moderate risk and a reliable stream of income to do?

There are no easy answers. The dilemma is particularly acute for retirees. A generation ago they could invest their savings in a 10-year U.S.-government bond and...